Best Equity Release Rates in the UK for 2024 Compared & Reviewed

In 2024, the best equity release rates range from as low as 5.65% (AER) fixed for life to a high of 7.34% (AER), with an average rate of approximately 6.21% that offers competitive terms, flexibility, and favourable repayment options. Comparing and reviewing top lenders helps you find the most suitable plan for your financial needs.
Equity Release Interest Rates
  • Last Updated: 09 Oct 2024
  • Fact Checked Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

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Francis Hui
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Are You Looking to Discover the Most Competitive Equity Release Interest Rates of 2024? Dive Into Our Comprehensive Review of Top Lenders to Identify Which Plan Offers the Optimal Mix of Terms, Flexibility, & Repayment Options...
Key Takeaways
  • UK equity release rates in early 2024 varied from a low of 5.34% APR to a high of 7.34% APR, with typical rates between 5.25% and 6.30%.
  • Rates typically exceed those of regular mortgages due to higher lender risk and the potential lifelong term of the loan, though they are usually fixed.
  • The rate influences how quickly debt grows, affecting remaining home equity, with factors such as the Bank of England’s base rate and market competitiveness impacting rates.

Equity release rates in 2024 have become more competitive, reflecting the financial industry’s response to homeowner needs, and with rates as low as 2.5%, this new benchmark sets a standard for affordability in the sector.

Providers now emphasise no negative equity guarantees and flexible repayment options, ensuring that homeowners can access their equity without the risk of debt exceeding their home’s value.

Did you know that in 2024, the landscape of equity release rates is more dynamic than ever? With rates hitting historic lows, missing out could mean losing thousands of pounds. This guide dives deep into the market, ensuring you don’t leave money on the table.

Keep reading to uncover hidden gems in the equity release market and discover how to secure the best equity release deals to safeguard your financial future.

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    What Are the Current Equity Release Interest Rates in the UK for 2024?

    The current equity release interest rates in the UK for 2024 range between 5.65% and 6.30% APR.

    These figures reflect the ongoing market dynamics, lender policies, and individual borrower circumstances.

    Equity Release Interest Rates in the UK for 2024: What to Expect

    Equity release interest rates in 2024 vary, but as mentioned, they generally range between 5% and 7%, depending on the provider and your circumstances.

    Rates have risen compared to previous years due to changes in the financial market, meaning it’s crucial to lock in the best rate you can, as even a small difference can significantly impact the amount of interest you’ll pay over time.

    Some providers, however, offer fixed rates for the lifetime of the plan, providing peace of mind for homeowners concerned about future rate increases, so compare rates from different providers and seek financial advice before committing.

    Compare the Best Equity Release Rates for 2024

    When comparing the best equity release interest rates for 2024, Pure Retirement’s Age Partnership Classic Flexible Lump Sum 1 leads at 5.82% AER, closely followed by Canada Life’s Age Partnership Ultra Lite Fixed ERC at 5.65% AER.

    Here are some of the most competitive rates:

    Provider Scheme Name Monthly
    (Rate)The amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.
    Annual Equivalent (Rate)The percentage of interest on a loan or financial product if compound interest accumulates over a year during which no payments are made. Annual Percentage (Rate)The number that represents the total yearly costs of borrowing money, expressed as a percentage of the principle loan amount.
    Canada Life Age Partnership Ultra Lite Fixed ERC 5.51% 5.65% AER 5.65% APR
    Just Retirement Age Partnership J1 Lump Sum Fixed ERC 5.55% 5.69% AER 6.20% APR
    Canada Life Capital Select Ultra Lite Fixed ERC 5.55% 5.69% AER 5.69% APR
    Just Retirement Age Partnership J2 Lump Sum Fixed ERC 5.59% 5.74% AER 6.20% APR
    Canada Life Age Partnership Ultra Lite Plus Fixed ERC 5.60% 5.75% AER 5.75% APR
    Canada Life Capital Select Ultra Lite Plus Fixed ERC 5.64% 5.79% AER 5.79% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum Fee) (AP) (Single) 5.66% 5.81% AER 5.81% APR
    Just Retirement Age Partnership Classic Flexible Lump Sum 1 5.67% 5.82% AER 5.82% APR
    Just Retirement Age Partnership J2 Lump Sum 1% Cashback Fixed ERC 5.69% 5.84% AER 6.30% APR
    Canada Life Age Partnership Super Lite Fixed ERC 5.70% 5.85% AER 5.85% APR

    Updated: 03/10/2024

    Scenario: 60-year-old single male with a £300,000 property value, who wants to release £30,000.

    How Does Equity Release Interest Work and What Is Its Impact on Your Plan?

    Equity release interest works by accumulating on the lifetime mortgage loan often compounded annually, which can increase the total debt over time and reduce the remaining equity in your home, impacting the inheritance left for beneficiaries.

    Impact of current equity release rates

    This means you don’t need to repay until the property is sold, move into care, or pass away.

    Best Interest Rates on Equity Release & Top Providers Compared

    Several providers are offering competitive interest rates on equity release in 2024, with companies like Aviva and Legal & General being well-known for offering rates in the lower range. Comparing multiple quotes is key to finding the best offer.

    It’s worth noting that some providers offer extra features such as inheritance protection or downsizing options, which can make their rates more appealing depending on your personal circumstances.

    Always review the full terms, not just the interest rate, to find the best deal for your needs.

    How Does Compound Interest Affect Your Equity Release Plan?

    Compound interest affects your equity release plan by increasing the total amount repayable over time, reducing the remaining home equity available to heirs.

    The interest is calculated not just on the initial loan amount but also on the accumulated interest from previous periods.

    This effect of interest compounding means that the longer your plan runs, the larger the final amount owed becomes.

    Fixed vs Variable Equity Release Interest Rates: Which is Better for You?

    The better option between fixed and variable interest rates depends on your risk tolerance and financial goals, with fixed rates offering stability and variable rates potentially providing savings if rates decrease.

    These are 2 options borrowers get to choose from when selecting a plan. 

    Here’s a quick comparison:

    • Fixed Interest Rate: Your interest rate stays constant for the loan’s duration, offering clear foresight into the final amount owed. This stability assures certainty in financial planning, though it also means missing out on potential savings if market rates fall significantly.
    • Variable Interest Rate: Your interest rate can change over time. This type of rate can be riskier for borrowers, as they may end up owing more than they anticipated.

    The interest on an equity release product is not necessarily paid off during the lifetime of the borrower; instead, it is typically paid off when the property is sold, either when the borrower moves into long-term care or passes away.

    APR vs MER on Equity Release: Understanding the Key Differences

    APR (Annual Percentage Rate) and MER (Mortgage Effective Rate) are both financial acronyms that represent different ways of calculating interest, with APR showing the yearly interest cost and MER including compound interest, affecting the total cost of borrowing.

    APR vs MER interest rate definition

    Let’s look at the difference between the 2:

    • The APR (Annual Percentage Rate) reflects a loan’s yearly cost, incorporating interest and all related fees. It’s a critical tool for comparing loan products, offering a standardised basis to evaluate the total costs of different loans beyond mere interest rates.
    • The MER (Monthly Equivalent Rate) translates the APR into a monthly interest rate, aiding borrowers in grasping their monthly interest obligations. It’s particularly valuable when interest compounds or is calculated more frequently than once a year.

    What about AER?

    AER stands for ‘Annual Equivalent Rate’ and is typically used for savings accounts. 

    It is the rate of interest that would be earned on the savings account if the interest was paid and compounded annually. 

    Equity Release Examples & Real-Life Scenarios

    Let’s say a 70-year-old homeowner with a property valued at £300,000 releases £60,000 of equity at an interest rate of 6%—if they live for another 15 years without making any repayments, the total amount owed could rise to over £144,000 due to compounded interest.

    This significantly reduces the inheritance left to beneficiaries.

    Another example involves a homeowner who opts for a drawdown plan, taking only small amounts as needed and ultimately reducing the amount of interest charged, as interest is only applied to the money withdrawn, making it a more flexible option for some.

    How Can You Secure the Best Equity Release Rates in 2024?

    To secure the best equity release rates in 2024, consider doing things like comparing offers from multiple lenders and working with a financial adviser to evaluate terms and conditions that align with your financial goals.

    best equity release rates uk

    It’s essential to think about the following:

    1. Compare Multiple Lenders: Rates and conditions differ, so comparing offers is key.
    2. Stay Updated on Market Conditions: Interest rates fluctuate with the market, affecting what lenders offer.
    3. Consult a Financial Adviser: A specialist can tailor advice to your situation, helping you understand how your unique circumstances and the type of equity release product chosen will impact the rates you can obtain.
    4. Consider the Whole Package: Look beyond just the interest rates; fees, flexibility, and the lender’s reputation are also important.

    Remember, the offered rate is calculated based on your specific circumstances and the chosen product type.

    Therefore, recognising the factors influencing the offered rate is critical, as the equity release best rates vary with the mortgage’s length and type.

    * While we regularly review our rates, they may have changed since our last update. Consulting with a financial advisor who specialises in equity release can offer insights into the best options currently available in the market, ensuring you make a well-informed decision.

    How Can You Compare Equity Release Interest Rates Effectively?

    You can compare equity release rates effectively by focussing on the APR to understand the total cost and the MER for insight into monthly interest costs.

    Consider the trade-offs between fixed rates, which offer stability, and variable rates, which can provide potential savings.

    Essential to making informed decisions is seeking personalised advice from an independent financial advisor.

    Strategies to Secure Lower Equity Release Interest Rates

    To secure lower rates on equity release, consider these strategies:

    1. Shop Around: Compare offers from various providers to identify the most favourable rates and terms.
    2. Negotiate: Engage with providers to see if they can offer better terms or promotions for new customers.
    3. Opt for a Lower LTV Ratio: A lower Loan-to-Value ratio can lessen the lender’s risk, potentially leading to lower interest rates.

    Be mindful that achieving a lower interest rate may not always be feasible. It’s crucial to weigh all costs and risks linked to equity release products before deciding.

    Which Equity Release Interest Rate Calculator Is Best for Your Financial Planning?

    The equity release interest rate calculator best for financial planning is a calculator offering detailed insights, including how interest accumulates monthly and annually.

    Choose calculators that enable adjustments to rates and term lengths, facilitating a clear understanding of their impact on the total debt.

    This aids in comprehensively assessing the long-term effects of your plan.

    EI Average House Price Comparison

    How Much Does Equity Release Really Cost?

    The cost of equity release goes beyond just the interest rates; in addition to the interest that accrues, you may have to pay arrangement fees, valuation fees, and legal costs.

    These fees can range from £1,500 to £3,000, depending on the provider and the complexity of your case, so factor these into your overall calculations.

    Over time, interest can compound on the loan (especially if you opt for a lifetime mortgage), meaning the total amount you owe will increase significantly. Understanding these costs upfront can help you make a more informed decision and avoid any surprises later on.

    How Do Average Equity Release Rates Vary by Age in the UK?

    In the UK, average equity release rates vary by age, with older homeowners typically qualifying for lower rates and higher loan-to-value ratios due to increased life expectancy and reduced risk for lenders.

    How exactly does that work?

    The older the borrower, the more they are typically allowed to borrow through equity release.3 

    This could indirectly affect the rate, as bigger loans could be subject to higher figures to make up for the lender’s increased risk.4

    What Influences Equity Release Mortgage Rates and Market Trends?

    Equity release mortgage rates and market trends are influenced by factors that include economic conditions, inflation rates, and regulatory changes all of which affect the cost and availability of equity release products.

    Equity Release Mortgage Rates Influences

    Understanding the current equity release rates in 2024 requires awareness of these several key factors:

    1. Market Conditions: The overall economic climate, including the Bank of England’s base rate and inflation levels, significantly affects equity release rates. When the economy is stable or growing, rates tend to rise, whereas, in a struggling economy, rates may decrease to encourage borrowing.
    2. Personal and Property Factors: The value of your property, age, health, and lifestyle choices impact the terms offered. Typically, higher loan-to-value ratios and older borrowers may face increased rates due to the larger amounts they can borrow. For instance, a 75-year-old homeowner with a high-value property may be eligible for a more substantial loan but at a higher rate.
    3. Lender Strategies and Product Features: Lenders’ competitive strategies and specific features of equity release products, such as Inheritance Protection or home value projections, also influence rates. Although a poor credit history may not disqualify you from equity release, it could limit access to more favourable rates.
    4. Current Trends: Observations from the Equity Release Council show a trend of increasing plan adoption as interest rates start to decrease slightly, reflecting a dynamic market. This indicates a growing interest in equity release plans as rates become more attractive to borrowers.

    When considering equity release in Nov 2024, it’s crucial to not only focus on securing lower rates but also to consider the comprehensive costs involved, including setup fees and potential early repayment charges.

    How Is Interest Repaid on Equity Release Plans in the UK?

    In the UK, equity release interest is repaid from the property sale proceeds when the borrower dies or enters long-term care, allowing homeowners to access funds without making regular payments.

    Interest compounds over time, increasing the total loan amount; for example, a £100,000 loan at 5% interest can double in about 14 years due to compounding.

    Since May 2022, new lifetime mortgages must offer penalty-free interest payments, allowing borrowers to reduce debt during the loan’s life. This option helps preserve more equity for heirs and reduces total repayment.10

    What Are the Best Current Equity Release Deals You Should Know About?

    The best current equity release deals typically offer competitive interest rates, flexible repayment options, and no negative equity guarantees, with plans from providers like Legal & General, Aviva, and More2Life that typically include features like drawdown options and lower upfront fees.

    It’s always worth checking the latest offers as they change frequently.

    Common Questions

    How Do Equity Release Interest Rates Compare to Regular Mortgage Rates?

    What Is the Impact of Interest Rates on Your UK Equity Release Plan?

    How Long Does It Take to Secure the Best Equity Release Plan With Low Interest Rates?

    How Does Inflation Affect Equity Release Interest Rates?

    Are Equity Release Interest Rates Higher Than Traditional Mortgage Rates?

    Can Making Interest Payments on Your Equity Release Plan Reduce the Amount Owed?

    How Do Equity Release Rates Vary by Location Across the UK?

    How Can My Health Affect the Equity Release Interest Rate I Am Offered in the UK?

    Will UK Equity Release Interest Rates Fall in 2024?

    Which Companies Offer the Best Equity Release Rates in the UK?

    Concluding Insights

    Interest rates play a crucial role in determining the cost and value of equity release plans, influenced by product features, borrower’s health, and loan amount.

    To find the best rates, borrowers should compare providers, assess fixed versus variable rates, and seek unbiased financial advice.

    Awareness of risks like negative equity and inheritance impact is essential.

    Making informed decisions requires understanding these factors and the terms of equity release products.

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